Global and ASEAN-6 steel scrap demand and supply

Posted on 09 May 2019

Source: SEAISI

According to worldsteel’s presentation at the 12th China International Metal Recycling Conference 2019, trend of EAF production is expected to grow. Currently, EAF is the mainstream in Europe, North American, Middle East, Southeast Asia and Africa. China still focuses on production by using non-EAF facility. However, worldsteel pointed that China may possibly push more EAF production and by 2035 the world EAF ratio would reach a new historical high.

Steel-making production by using EAF facility has lower environmental footprints. Compared to BF-converter furnace process, EAF using steel scraps as main raw materials has largely reduced environmental footprints. Moreover, it takes up smaller space with lower investment, few processes and flexible production. However, producing long products by using EAF lacks scale advantages with more difficulties in quality control and higher costs.

The advanced countries are the main steel scrap exporting countries with the US as the largest steel scrap exporting country, followed by UK and Japan. The major steel scrap importing countries are Turkey, India and Vietnam, which together accounted for one-third of the world steel scrap import in 2017.

According to worldsteel, world steel scrap export is around 100 million tonnes each year. The global steel scrap supply has been increasing steadily and demand also continued to grow. Major sources of steel scrap are from scrapped steel products. Worldsteel believed that there are still sufficient steel scrap supplies in the world market and some of the regions may even encounter oversupplies.

Changes in the global steel scrap supplies and consumption

Source: World Steel Association

China, in particular, is currently having sufficient domestic steel scrap supplies and there might be a possibility of over supplies in the future.

Forecast of domestic steel scrap supplies in China.

In the case of ASEAN, apparent steel demand in the ASEAN-6 countries continued to increase significantly since 2009, except for 2017 when steel consumption retreated mainly due to destocking activities in some countries. On the other hand, domestic steel production in the region did not show any significant increases until 2016 with the commencement of the new capacities from companies such as Formosa Ha Tinh in Vietnam.

Steel-making production is mainly done through scrap-based EAF facilities. However, capacity utilization rate still remained low, at below 50%. Despite this, scrap demand in the region continued to increase with an average annual growth rate of 4-5% in the last 10 years. Scrap demand saw a significant increase of 26% y-o-y to 24 million tonnes in 2017. ASEAN-6 is not self-sufficient in scrap supply and still needs to rely on import from other countries. Major sources of import are USA, Japan and Australia.

Most of the six countries in ASEAN are net importers of scrap. Vietnam is the region’s biggest scrap importer accounting for nearly half of total volume of scrap import in the region, followed by Indonesia and Thailand.

The countries in the region that are net exporters of scrap are Philippines and Singapore However, volume of scrap export from Philippines declined significantly in 2017, by 34% y-o-y. This could be due to higher demand within the country. Singapore’s scrap export volume has not been significant, with export volume declining in 2017.